Democrats heed watch out for those open mics again when trying to spin Republicans as extreme.

Tax Breaks for the 'Rich' Revisited

While reading through a message board today, someone posted a link on 'the evidence' that the 'game is rigged for the wealthy.'

Here was my reply:

So in the article,

"...most federal subsidies aimed at building wealth, such as certain tax deductions (officially called "expenditures"), credits, and preferential rates, go to the richest taxpayers."

It does not elaborate on what breaks we are supposedly talking about, but for starters, the terms for a subsidy and a tax 'expenditure' are quite misleading. This implies that the government just hands over a check for being rich. One actually has to do something, the activity that the tax deduction is trying to encourage the populous to do, in order to take it. If the deduction is being doled out, then the intended policy is working.

Also, to take advantage of most tax breaks, you actually have to be making income to be able to deduct something. Since the size of the break will be proportionate with the investment or activity, which will be proportionate to income, obviously wealthier people will be able to use more of a break than a poor guy. As an example, if a poor guy and a rich guy both buy houses of 50% of their net worth, and the poor guy spends 50k, but the rich guy spends 5M, clearly the rich guy is going to get a bigger deduction than the poor guy. This should not be a news flash to anyone. But suddenly, when the raw numbers are compared people scream and shout that it is unfair because the breaks are larger for the rich guy. They suddenly forget about the other side of his tax burden and that most of the tax burden in this country is shouldered by people making more than 100k a year. For example, if he got a tax break of 5k, that shouldn't be the end of the story as it usually is, but instead put in context to the 50k he paid in taxes that year. Populist media loves to focus on only one part of the story that attempts to anger the masses.

"This money helps the more prosperous buy homes, save money, start businesses, pay for college, and retire comfortably."

Once again it would be nice if instead of being aloof with the details that they would actually name some of the breaks. Many breaks apply to everyone, but many are phased out under certain income limits. While a 'rich' guy with a big house can get more deduction than a middle class guy with a small house, many breaks like IRA contribution, Pell Grants, and student loan interest are only available to those making less than 60k a year (approx.). So what breaks for the rich this sentence is supposedly referring to is quite intentionally vague.

In referring to the "preferential rates" for the rich, this is also misleading. Ordinary income rates are not preferential. In fact, they are quite the opposite with an exponential punishing marginal curve for higher levels of income. So I suspect that once again the author is using sleight-of-hand and referring to long term capital gains rates, which the 'rich' are likely to have more of. But this rate applies to everybody, not just the wealthy as the article is implying. Should it be policy to punish a rich guy if he happens to have more investments that qualify for these rates than a middle class guy? And as discussed in another article, the long term capital gains rate exists for a reason. Investments involve an aspect of risk - you can lose money. It's not like just showing up for work and collecting a paycheck. And generally long-term capital gains come from investing in a venture that creates jobs for other people, which should be encouraged.

If you didn't catch it from the front, well, the article leaves you with a biased tone towards the end. You should note that this is an opinion article (See 'Commentary' at the top), and given his previous writings it is clear he is just another populist.

Hey, as it would turn out, that same politician written about below owes 300k in unpaid back taxes on her plane. Well what'dya know.

Just Another Scumbag Politician Lining Her Own Pockets at the Expense of the Taxpayer

A Missouri Democrat, Senator Claire McCaskill, for the last five years has chartered 89 flights for herself through a company she owns (or has 'an ownership stake in', if you'd rather downplay the issue like the Washington Post does). Now there are no defined rules about this being allowed or disallowed, but clearly it begs the questions of how many of those flights were necessary (one flight every 20 days), and were the costs fairly valued (they say they were)? It is a dangerous financial situation for one party to be both the beneficiary and the administrator, for the spending of other people's money, of a transaction. Would we want our President passing a bill to buy 1 million of his books to donate to libraries? No, because that would be a conflict of interest.

So, it is interesting to note the liberal Washington Post mention of the "no profit" that was earned. Well I tell ya, that must be one crappy airline they are running over there! But all joking aside, this is a actually a spin to put the situation in the most positive light. Your average American doesn't think of profit the way an accountant does. Your average American will take profit to mean that it is the money above the cost actually incurred to make, package, and sell the product, or in this case, sell the flight. They would see any money beyond the cost to fill the plane up with gas, pay the pilot, and the fee to rent to airplane as profit incurred. But an accountant will also factor in a non-cash event called depreciation, which reduces profit. It is a mechanism to shield profits from taxation (or in this case, 'perceived benefit') while still passing through cash-flow. So while it may be true that at the bottom of the accounting ledger, net income (profit) was recorded as zero, it does not mean that positive cash flow didn't accrue to the owners. And of course by saying that they earned zero profit, this implies to your average American that the senator derived no benefit from these chartered flights, which is clearly misleading.

And think about it, if they got at least 89 flights out of it, and who knows how many other flights from public customers and they only made $200 in 'profit' would you think they would be partial owners to this company? Why would a firm like that even be in existence?

How often do you think this kind of thing happens? It does make you wonder why nearly every member of congress is a multi-millionaire, doesn't it?

Some Illegal Immigration Costs

I haven't had the time to put out any new articles in a while, but I want to share with you some articles that I have come across:

The first is about the cost of illegal immigrants on society. The Federation for American Immigration Reform found that they cost society $113 billion a year. It is over $600 million a year in LA county alone for just the children of illegal immigrants. About half of these costs are related to education because school districts are not allowed to ask if a student is a U.S. citizen or not. Great, how about we just cut to the chase and open some schools with American teachers in Mexico funded by US taxpayers, because this is pretty much what is going on now.

Much of the other half of the tab is from the receipt of welfare benefits. Now part of these costs are from anchor babies, where the US constitution grants rights of citizenship from being born on US soil. Sure, the 14th amendment gives this right, but since it was written about 150 years ago, do you think they had anchor babies in mind when they added this? Of course not. In fact, the original intent of this amendment was to override a prior US Supreme Court ruling that attempted to deny freed slaves citizenship.

And do not forget that these benefits are collected by their illegal immigrant parents. What kind of incentive does that provide that says, "Yeah, hey, come to America illegally and we will pay you money!" And it is ignorant to think that 100% of any transfer payments will only benefit the children.

So some of you might harp on the Jus soli social policy without thinking critically about it. But two things: Their parents are most likely not paying income taxes since they are not legally even allowed to work, which means that they are leeching off society. Bad. And two, of advanced economies, only the US and Canada still practice this social policy. Perhaps the 14th amendment needs to be modified and updated for the times where citizenship is granted only to children of legal residents.

The Standard Perception of the Wealthy

Today I had a jousting with an individual who goes by the name of Solar on a comments section to a news article (his comments are in quotes):

Trickle down economics primarily benefits the very wealthy, which of course, even further widens the already enormous divide between the very wealthy and everyone else.

How does it affect you that there are a bunch of billionaires in the USA? The only way that it affects you is in your perception that someone out there has more money than you! And that bothers you. Wealth 'inequality' is the product of a successful free market system. It lets those with the hard work, risk tolerance, and ideas thrive.

The socialist system works the other way. It doesn't catapult people from the lower ranks to economic prosperity, but instead prevents everyone from reaching economic prosperity. Now tell me how a system where there is no 'wealth inequality' is a good thing when everybody is poor?

How does it affect me? That's easy: 1. I do not accept that MY air and water belong the David Koach's and Exxon Mobil's of the world to do as they please. MY air and water belong to ME. You hear that? Do not @#$%&! up my environment to put more dollars on your already over-stuffed pockets. Got that? 2. I do not accept that Wall Street has the right to leverage the American dream, i.e., the housing market, then when they lose that over-leveraged bet, look to ME to bail out their miserable @#$%&!. Got that one? Wake up you miserable FOOL! I don't mind billionaires who care about the environment, support legislation to improve the environment, and try to do some good for ordinary people with their money. But I do have a problem with billionaires who buy lobbyists to advocate less consumer and environmental protections. In other words, I have a problem with Republican billionaires. Open your eyes FOOL!

Solar, 1) So what you are saying then is that you'd be okay with bad water as long as the guy running the company isn't rich? If they brought in a poor Chinese manager, then you'd be okay with pollution then? And is Mark Zuckerburg somehow polluting your water that we don't know about? That would make a great headline that everybody would like to know about. Please share.

See, here you are making an absurd accusation that somehow a person being 'rich'' means that they are polluting your water. Oh and by the way, Exxon Mobil is not a person, it is a corporation.

2) It looks as if you continue to move farther away from your original statement. But okay, so you think it is fine if Americans take out loans on everything that they really can't afford, such as over-sized houses, hummers and home equity lines for vacations? And you are okay with the fact that the government mandated through the Community Reinvestment Act that banks have to provide sub-prime loans if they are allowed to service geographic areas? And you are okay with the conflict of interest where mortgage backed securities were created by a government sponsored entity that provided the catalyst for the underestimating of risk to take place?

So once again you didn't prove a point how someone being wealthy negatively affects you.

See you are invoking a logical fallacy that goes along like this: All 'Rich' people like ice cream. All terrorists like ice cream. I hate terrorists, therefore I hate 'Rich' people.

So you think that only Republican billionaires buy lobbyists to do these things, eh? LOL, it is obvious that YOU are the fool!!

Wealth Flight

I came across an article from earlier in the year that details the wealth flight from New Jersey. New Jersey chose to fund its coffers by taxing its wealthy residents and so those residents started leaving the state. This is a good example of what can happen on a grander scale in the United States. Or perhaps instead of Americans leaving, since it takes a lot more commitment to leave one's homeland than simply crossing state lines, wealthy foreigners avoid immigrating here.

Obama and the Deficit

Okay, so we now have proof that Obama is full of crap. Today Bloomberg reported that Obama has added some demands to the bill that would keep current tax rates from increasing come January 1. Before, he was so busy crowing about how by not raising taxes on high income earners, their gained income was going to "cost" the country too much in the form of a higher deficit (see my Oct 2 post). But come today, the deficit doesn't seem to be a problem anymore now that he is making a deal that includes extending the unemployment benefits to infinity which will add another $150 billion (a year?) to the deficit. Remember when Bush a couple of years ago ran a deficit of $445 billion and that was the biggest ever? Well Obama makes even him appear as a tightwad in comparison. When will Obama next embarrass himself about keeping the deficit under control?

Just a TSA thought

What is to stop a terrorist from blowing himself up while he is waiting in the airport security line? Usually there are lots of people around and it would mock the airport security.

TSA Gone Wild!

One poor man has his urostomy bag ripped off his body leaving him covered in urine.

Another lady has her blouse pulled down exposing her breasts to the entire screening area.

You could be arrested for refusing to submit to either scan once you enter the screening area.

And one lady mocks the TSA by stripping down to some transparent underwear... and films it!